If you track the tech media these days, you would think the Venture Capital (VC) was this sexy, explosive industry with fantastic results and rocket-like growth. You would be wrong. The facts are that the VC industry is shrinking and over the past decade has delivered sub-par returns.

In fact, a quiet attack is building on the VC industry. Entrepreneurs and tech-company executives I have been speaking to lately have turned up their griping about VC investing, pointing out that it's dysfunctional and overrated. They point to lukewarm returns and question the value of spending time with VCs who are famously good at wasting time.

One very successful Boston enterpreneur recently went as far as to tell me he thought most VCs were in trouble. The new theme is backed up by data. VC returns over the past 10 years have been dismal, averaging about 7% annually, trailing the results of the S&P 500 Index, which has averaged 8.53% per year, according to Cambridge Associates.

Nearly $200 billion is invested in VC funds, according to the National Venture Capital Assocation, mostly by large pension funds and educational institutions. So, this brings up the question: If you are a large pension fund and you are investing in VC funds because they have more risk and potentially larger returns, what would you say when you find out their results are trailing the S&P 500 Index? And why would you continue this investment, other than for diversification?

Last year, the Kauffman Foundation, which invests in VC, took on the VC industrial complex, pointing out its poor returns over the last decade. "Venture capital (VC) has delivered poor returns for more than a decade," said the report. "VC returns haven’t significantly outperformed the public market since the late 1990s, and, since 1997, less cash has been returned to investors than has been invested in VC."

Then there's this: The VC industry has actually been shrinking for years. The number of VC firms has dropped about 25% percent since 2000, according to the The National Venture Capital Association.

In their defense, VC returns are still outstanding over a 20-year and 25-year period, but the problem with that is it includes results of the great technology bubble of the 1990s, in which huge numbers of tech companies were floated at outrageous valuations. The VCs made off like bandits, but the grandmas investing in tech IPOs didn't do so well.

How does one quantify the effect of the tech bubble on the favorable 20-year results of VC industry? Was that period simply an anomaly that made VC investing look interesting? The bottom line: The data is erratic and has a short history, so it does not really inspire confidence. It's impossible to tell whether these guys are good or whether investing in a VC fund is the same as throwing money on the roulette wheel.

Rather than looking at VC investing as some sort of sexy, exclusive pursuit, maybe we should look at it as just another bucket of investment statistics -- throw a bunch of money in there, and let's look at the averages. You are, after all, investing in a bunch of young startups, so you might get lucky.

The tricky part is sorting out whether individual VC investment funds are winning because of "survivorship bias" (they lucked into the right IPOs) or skill. The VC industry is secretive which makes analyzing it even more difficult. Imagine trying to analyze the mutual-fund industry without any performance data.

I would expect to see more scrutiny on the VC industry and its returns as a whole as this trend continues. The process is slow, because of the way VC funds are structured. Typically they operate over a long term -- usually about 10 years -- so investors often can't analyze their results until they've been in the fund for a decade.

Because we are coming up on a cycle in which decade-old funds performed poorly -- as proven by the data -- the big pension funds that invest in VC funds because of their alleged potential for outsized returns are going to start having second thoughts.

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